Qingdao aims to harness the sea for its growth

If you ask for a bottle of beer in a restaurant on the mainland, chances are that you'll get a Tsingtao. The beer has been a highlight during the past century for the former German colonial town of Tsingtao, or Qingdao as it is known today.

Home to several other well-known brands such as home appliance maker Haier, Qingdao has had growth of more than 10 per cent every year for the past decade.

Now on top of these traditional competitive industries, the coastal city in Shandong is boosting its marine economy as the central government attaches more importance to exploring and utilising ocean resources.

Encouraged by President Hu Jintao in his inspection tour two years ago, the city aspires to become the core of a 'blue economic zone' on the peninsula, expecting the marine industry to contribute 15 per cent of the city's economy by 2015.

Ambitious goals include becoming a shipping hub in the northeast Asian region and a centre for regional marine industry development by 2020.

The marine industry accounts for about 10 per cent of the city's economy, said Ren Zhengang, deputy director of the municipal government's Development and Reform Commission. 'Our target is to improve this ratio by 1 percentage point each year, so it will reach 15 per cent by 2015,' he said.

Electrical appliance manufacturing is the city's strongest industry. During its prime time around 2005, sales from the industry accounted for 27 per cent of all major industrial enterprises in Qingdao, according to Xinhua.

Most local governments along the coast have mapped out their own plans in developing the marine economy as the central government dedicated a whole chapter to the issue in its 12th five year plan. Shandong, Zhejiang and Guangdong are the designated pioneers, according to the plan.

Qingdao has already capitalised on its geographical advantage, as it is now a renowned tourist destination. The sailing events it hosted for the 2008 Olympics helped to boost its profile and host a number of water sports events since then.

The city also has the world's seventh largest port in terms of cargo-handling capacity, while its airport handles 12 international passenger and cargo flights to places like Hong Kong, Seoul and Tokyo, Ren said.

Although Tianjin and Dalian, Liaoning, are two of its mainland competitors, it also faces challenges within the province from such cities as Rizhao, which has set aside 150 million yuan (HK$179.52 million) in a special fund to develop its blue economy.

Ren said that, apart from logistics, marine development would also include the use and promotion of desalinated seawater as the mainland continued to improve water conservation facilities to solve its overall water shortage. By 2015, a quarter of the city's water supply would come from desalinated seawater, he said.

Water experts have researched the possibility of transferring desalinated seawater from coastal areas to thirsty inland areas such as Inner Mongolia and Gansu in recent years. 'Taking advantage of seawater has been more and more important to our economic growth and conservancy of water resources,' Ren said.

To support the programme, the city built a hi-tech industrial park on the north shore of Jiaozhou Bay on a piece of land that used to be salt farms with a few shrimp ponds.

'The yield from one mu [one-fifteenth of a hectare] of salt farm was 2,000 yuan, but when it was turned into land for development of hi-tech industries, the yield was more than 2 million yuan a mu,' said vice-mayor Zhang Hui .

But concerns over pollution remain. Ren said: 'There's inevitably a conflict between [economic] development and environmental protection'. He reiterated that one-third of the 63 square kilometre park would be devoted to ecological restoration.

Xi Zhigang, head of the park's publicity department, said: 'A number of rivers run down to the sea in this area, and sewage disposal here will impact on water quality in the basin.' Polluted rivers would be closed for sewage treatment before they drained into the bay, he said.

Zhang complained that a requirement from the central government to reduce emissions was a major challenge the city government faced.

'Pressure over the emission reduction target is too high. During the 11th five-year plan period [2006-10], the requirement was above 20 per cent. And it's still the same for the next five years,' she said.

This had forced the city to become more picky in introducing foreign investment. 'We'll never meet the target if we continue to introduce industries that consume a large amount of energy,' she said.

She said China Merchants Group was investing at least US$18 billion in the park in the next five years, mainly for technology-intensive and non-energy-consuming projects. The group had invested in banks, ports, logistics, container manufacturing and securities in Qingdao, she said.

Hong Kong, the second-largest foreign investment source in Qingdao, has contributed 16 per cent of its approved foreign investment projects. Trade between the two reached US$1.3 billion last year, up 85 per cent from 2009.

'One thing that baffles Qingdao is that it has many good scientific achievements in marine research, but they have yet to make their way to the market,' Zhang said, adding she hoped companies from Hong Kong and Taiwan could help on this issue.

Marine forecast

Qingdao expects the marine industry to contribute this much of the city's economy by 2015: 15%